Why Use A Gift & Loyalty System in Your Coffee Shop

Gift and prepaid cards can be one of the most powerful features a POS can provide and that a coffee shop or restaurant can use. Why? Because when done correctly, they make you more money.

Customers can only spend that money at your coffee shop. It seems simple but this is one of the best reasons to offer a gift or prepaid card. Once that money is placed on the card, the customer has to either spend it with you or lose out. In the coffee and restaurant industries, that means that the customer will most likely come back. They can’t spend it at Starbucks or any other competitor. Additionally, you receive that money either way. While it is best to have the customer come back, it’s still a win.

They will spend more money. Many studies have shown that the average customer spends 20-50% more than their gift card balance on small amounts. In other words, if the customer is given a $20 gift card, they will most likely spend and additional amount of cash. Customer often will purchase an additional coffees, add an upgraded item to the order or order additional food or beverages.

The average dollar per ticket increases with gift card usage. This is a little different than the item above. If a customer has money on a gift or prepaid card, they are far more likely to ask for an upgraded drink, add an extra item or purchase the bigger size when paying with a gift card. Remember, it is a “No Guilt” transaction to the customer. They know they can’t spend the money anywhere else so why not splurge a little.

Gift cards are a “no guilt” transaction. What does this mean? Simply put, we don’t feel bad about spending the gift or prepaid card money at your store. If a customer hands you a $20 and gets $5.60 back, they KNOW that they just spent $14.40. If they hand you a credit card, they know, in the back of their mind, that they have to pay for that eventually. They also see it on their statement. A gift or prepaid card is different. The slight pinch or twinge of how much they spent is on the initial transaction. After that there is no guilt felt at spending the money with you. They know they can’t spend it anywhere else!

They can help reduce your credit card fees. This is a big one! If you pay a swipe fee on your credit card transactions, gift cards will be helpful. When done right, there is no swipe fee on a gift card transaction. That means that you are not paying th $.10 to $.15 credit card swipe fee on every one of those gift card transactions For example, if you pay $.15 a swipe for a credit card, a customer using a gift card for 10 purchases can save you $1.50. If you have 50 gift card transactions a day that is $7.50 a day. That is $2,700 a year that will go back into the coffee shop or cafe.

They can reduce theft. Less cash transactions mean less theft. Customers using a gift or prepaid card will reduce your cash transactions. That makes it more difficult for employees to pocket money. Gift cards are harder to steal because there has to be a transaction to load them. This is a far more secure method than a gift certificate. Also, if the gift cards are stolen, they are just plain plastic until activated! Finally, employees can’t easily double punch or add points to a card like they can with a paper loyalty system.

They give you virtually unlimited marketing opportunities. Gift, prepaid and rewards cards give you flexibility from a marketing standpoint. You can use them as a reward or loyalty system, treat them like a business card with money on them and hand them out to the plumber, electrician or the guy that sold your house. Offer buy $20 get $25, give a drink away with purchase and far more.

Mike Spence is the President of SelbySoft, Inc. A point of sale provider to the coffee, cafe and pizza industries. For the last 20 years, Mike and SelbySoft have helped thousands retailers use gift and prepaid systems to increase their bottom line, reduce theft and retain customers through proven point of sale and gift card systems.

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